The Fenix Outdoor group, which owns the Swedish Naturkompaniet retail chain of outdoor stores along with Fjällräven and several other brands, has extended its retail presence to Finland, where it fully acquired the Partioaitta chain last month.
Partioaitta is the largest specialist outdoor retail chain in Finland, with 11 stores around the country that generated a turnover of about €18 million last year. The profitable retail group has been sold to Fenix by the Finnish boy scouts organization, which apparently wanted to focus on its other tasks, as it faces a slight decline in memberships.
The Fenix group intends to expand the Finnish chain, targeting a network of 15 stores a few years from now. With an average size of about 500 square meters, the current Partioaitta stores are mostly concentrated around Helsinki, Tampere and a few more remote locations, with apparent gaps in other important towns such as Lahti and Turku. Established in 1928, the Finnish chain has been led for the last two years by Nina Ehrnrooth, formerly deputy Finnish country manager for Stadium, the Swedish sports retailer, and she is to remain in place.
With 27 stores, including six franchises, Naturkompaniet achieved sales of 379.4 million Swedish kronor (€42.2m-$61.7m)) last year, and a juicy operating margin of about 17.3 percent. The Swedish retailer’s sales jumped by 21 percent that year, thanks in part to outstanding weather conditions in Sweden at the start and the end of the year – although its performance weakened in the first quarter of this year, as detailed further down in this article.
A significant share of Naturkompaniet's turnover is derived from the brands owned by Fenix Outdoor, from Fjällräven to Tierra, Primus, Hanwag and Brunton. Some of them have large corners dedicated entirely to these brands, although the company’s buyers decline to provide a breakdown and insist that they treat the Fenix-owned brands like any others. The takeover of Partioaitta could support sales of Fenix' brands in Finland but Henrik Hoffman, managing director of Naturkompaniet, said that they were already well distributed in Finland before the takeover, and he did not expect any major changes on that front.
Fenix Outdoor had a retail presence beyond Sweden a few years ago, after its acquisition of Skandinavisk Höyfjellsutstyr in Norway. This occurred in 2001, when the then Fjällräven group moved into retailing by taking over Friluftsbolaget. The company’s retail unit suffered several years of operating losses, so it decided to pull out of Norway in 2006. Since then, Naturkompaniet has enjoyed a remarkable turnaround under Hoffman’s leadership.
Martin Nordin, general manager of the Fenix Outdoor group, said that there is going to be a much more judicious fit between Naturkompaniet and Partioaitta. Both retailrs have their origins in the scouting movement, and their assortment has many brands in common, focusing on hiking and trekking (unlike the situation with Skandinavisk Höyfjellsutstyr, which focused more on alpine products).
On the other hand, the Finnish market is much more price-sensitive, which will require some adjustments and may not yield the same margins as in Sweden.
The Fenix group has recently embarked on a spate of acquisitions. In 2009 it added Rosker, a British distribution company, as well as Brunton, an American outdoor brand. Earlier this year it acquired Bus Sport, the distribution company for Hanwag, Fjällräven and several other brands in Switzerland, as well as Fjällräven Arctic Fox, an American distribution company that also runs a Fjällräven store in New York.
Due to lower sales in its retail business, the Fenix Outdoor group suffered a 2 percent decrease in its net sales for the first quarter of this year, down to SEK 325.8 million (€36.3m-$53.0m). The strength of the krona deflated its sales, which would have increased by 5 percent in local currencies. Then again, the two acquisitions described above, in Switzerland and the U.S., added about 4 percentage points to the group’s sales for the quarter.
The sales dip in reported terms was entirely attributed to a lower turnover in the group’s retail segment in January and February: Sweden experienced a very cold winter starting in November last year, meaning that many consumers equipped themselves for the freezing weather by the end of last year and did not return to the stores early this year. Furthermore, the retail unit faced a tough comparison with an exceptional first quarter of 2010.
Comprising only Naturkompaniet, the retail segment suffered a sales decline of 15 percent to SEK 59.3 million(€6.6m-$9.7m) in the first quarter of 2011, and its operating profit shrunk to just SEK 0.8 million (€89,100-$130,237) from SEK 8.1 million (€0.9m-$1.3m) in the year-ago period. With 27 outlets, the number of stores remained unchanged.
On the other hand, Fenix' brands segment, consisting of Fjällräven, Tierra, Primus, Hanwag and Brunton, saw its sales inch up by 1 percent to SEK 266.6 million (€29.7m-$43.4m) in the quarter. This segment’s operating profit increased by 8 percent to SEK 71.8 million (€8.0m-$11.7m).
The brands segment achieved a sales increase of 8.6 percent in Sweden. Sales remained nearly stable in other Nordic countries and in Germany. They grew by 2.9 percent inthe Benelux and jumped by 4.2 percent in other European countries. The group had a hard time in the U.S., where its sales dropped by 14.6 percent.
Due to the decline in the group’s retail sales, which are only generated in Sweden, this country’s share of the entire company’s turnover declined to 24 percent, compared with 26 percent last year. On the other hand, the share of Germany increased by 1 percentage point to 28 percent, while other Nordic markets and the Benelux countries kept the same share.
Adding up the two segments, the Fenix Outdoor group’s operating profit slid by 3.5 percent to SEK 65.2 million (€7.3m-$10.6m) for the quarter, due to lower sales at Naturkompaniet and higher amortization. Yet still, partly due to lower financial costs, the group’s net profit landed at SEK 44.0 million (€4.9m-$7.2m), up from SEK 41.9 million (€4.7m-$6.8m) for the same period last year.